1. At the Intersection: A Review of Institutions in Economic Development

Abstract

We present accepted basic arguments on the role of institutions in development and then discuss the corresponding empirical evidence in support (or not) of those arguments. Methodologically, our emphasis is on experimental evidence wherever available, and thematically we focus on political and legal institutions. In the political sphere, we distinguish between rules shaping representation and accountability, and state capacity. In the legal sphere we distinguish between the profile of legally sanctioned rights (such as property rights and the role of informality) and the workings of the judiciary and the quality of enforcement. We distil the lessons learned from the literature and present open questions in each topic, thus highlighting promising avenues for future empirical research. Institutions matter for growth and inclusive development. But despite increasing awareness of the importance of institutions on economic outcomes, there is little evidence on how positive institutional change can be achieved. The Economic Development and Institutions-EDIresearch programme aims to fill this knowledge gap by working with some of the finest economic thinkers and social scientists across the globe. The programme was launched in 2015 and will run for five years. It is made up of four parallel research activities: path-finding papers, institutional diagnostic, coordinated randomised control trials, and case studies. The programme is funded by the UK Department for International Development. For more information see http://edi.opml.co.uk.

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“…This is largely due to multiple information asymmetries, which are often utilized by them for their own benefit, resulting in hefty welfare losses for the intended beneficiaries (Banerjee et al 2018). Accordingly, the literature has emphasized the pivotal role of information in the efficient functioning of the markets and proper provisioning of public goods and services (Dal Bó and Finan 2020;Jensen 2007;Protik et al 2018;Stigler 1961).…”

Using Information and Technology to Improve the Efficacy of Welfare Programmes: Evidence From a Field Experiment in India

“…This largely happens as a result of multiple information asymmetries, often utilised by the latter for their own benefit, resulting in hefty welfare losses for the intended beneficiaries (Banerjee et al, 2018). Accordingly, the literature has emphasised the pivotal role of information in the efficient functioning of the markets and proper provisioning of public goods and services (Stigler, 1961;Jensen, 2007;Bó & Finan, 2020;Protik et al, 2018).…”